How Brexit Affects Print on Demand Businesses?

On 23 June 2016, the people of the United Kingdom voted to withdraw from the European Union, making it the first, and so far the only country, to leave the EU since its establishment. 

In December 2020, the transition period ended, and the free movement law became obsolete between the two entities. What does this mean for print-on-demand (POD) businesses in the United Kingdom and the European Union? Let’s find out!

Who Are the Affected Parties?

While the whole economic sector needs to adjust to the new reality, several parties are going to endure major changes. We have made reference to some examples below:

• British POD businesses that have customers in the European Union

• European Union POD businesses that have customers in the United Kingdom

• The European courier network.

What Exactly Has Changed?

Now, as the United Kingdom is treated as a third-party country by the European Union, the value-added tax is applied to all imported and exported goods between these zones.

If the cost of the product is less than 135 pounds, the VAT is paid by the UK company, but it is usually included in the end product price, so the customer pays it. If the cost of the product is more than 135 pounds, the VAT is paid at the point of delivery (customer pays as they receive the goods). 

Additionally, customs declarations also need to be made, but this is usually completed by the courier companies.. Nevertheless, the costs are still covered by the customer. The standard VAT rate is 20% for the majority of the goods and the reduced VAT rate is 5%. Custom rates are different depending on the types of goods, starting from about 2.5%.

For example, if a potential customer from Norway wants to buy ten t-shirts from a POD company in the United Kingdom for the total price of 100 euros, they will need to pay the customs fee as well as value-added tax, which could even double up the price.

In addition to VAT, you now also need an EORI number. EORI is a unique number used to transport goods into and out of the European Union, used for custom declarations and different official papers. If you ship your goods without an EORI number, it would not be permitted to pass through customs, and you will then be expected to pay for storage fees. 

What Does It Mean for Print on Demand Businesses?

In short, Brexit changes everything for the POD sector! If your customers used to base their choices on affordability or delivery costs, they certainly will now. It is neither practical nor cost-effective for customers from the EU to choose a POD company in the UK or otherwise, especially if they can find cheaper alternatives elsewhere.

As such, a sharp decrease in revenue poses a real threat for POD businesses all across Europe and the United Kingdom. For example, only a month after the cessation of the free movement law, exports to the EU dropped by 68% compared to the same period last year.

What Is the Solution?

British POD companies can open fulfillment centers in EU countries, while European POD businesses can do the same in the United Kingdom. However, such a solution is viable only for large-scale companies that have enough resources and time to pursue this option. Meanwhile, for the majority of middle and small-scale POD businesses, this is not an option.

You can look for printing facilities in the countries where your customers are located, allowing the ordered products to be printed and delivered from a closer location. While this solution is possible, it presents a lot of new challenges. For instance, you will need to look not only for one but for dozens of different print partners in several countries in Europe, depending on your order flow.

This means you will have to repeat the tiresome and exhausting process of contacting multiple print partners, discussing cooperation details, and choosing the right ones over and over again. Not quite high-efficient, right?

Another solution that solves your issue, but doesn’t create a bunch of new ones, is finding a third party that would take care of printing and delivering for you. This way, your customers can not only buy your products at affordable prices but also receive their purchases quicker. Additionally, you will save the fuss of applying and getting an EORI number.

While there are lots of third-party companies that offer such services all over the world, here is the list of reasons why you should consider choosing Cloudprinter.com:

• Network of 170+ print partners. All of our print partners are reliable and trustworthy since we check all of the partners for quality and efficiency.

• 104 countries covered. You will gain the opportunity to broaden your customer base and sell products all over the world, not only in the European Union.

• Environmentally friendly. Printing as local as possible allows you to reduce your carbon footprint by 95.6%and contribute to the fight against climate change.

FAQ: Brexit and Print on Demand Business

What has changed?

The United Kingdom has left the European Union, meaning the free movement law is no longer applicable to goods being shipped between the two parties

How does it affect your customers?

Due to the need to pay taxes and check goods at customs, your customers will experience inconveniences in terms of money and time.

How will it affect imports, exports, and shipping?

Both import and export goods are required to have value-added tax and undergo customs control. This means added costs for either the customer or the business.

What’s VAT and how does it affect me?

VAT is a value-added tax. Depending on the total cost of the products, it is either paid by the business in their country of origin or by the end customers at their location.

What's an EORI number and do I need it?

EORI is a unique number used to transport goods in and out of the European Union. It is also used for custom declarations and different official papers. Without it, you can't ship goods between the UK and EU, and vice versa.

How to ensure that my customers don’t turn to local competitors?

Provide local fulfillment and print your products as close to the delivery destinations of your clients as possible. Use third-party companies such as Cloudprinter.com to outsource printing and delivery.